Wednesday, May 16, 2012

We're posting up notes from the Ira Sohn Conference. Lone Pine Capital's Stephen Mandel gave a presentation on how he's bearish on fixed income and how he likes Kohl's (KSS) & companies that shrink their share counts, as well as tech leaders.

Fixed income:. "Heads I win very small, tails, I lose very big." Governments printing money, and want to inflate their ways out of debt. Pensions and individuals are using the rear view mirror to flood into fixed income.

Likes "Tech Leaders." Companies that are leaders in their fields, internet search, PCs & mobile devices, travel. (Note: he owns Apple (AAPL), Google (GOOG), and Priceline.com (PCLN)). Generate high ROIC, lots of excess cash, yet trading to less than run of the mill low growth industrial companies. Close to 20% of long portfolio in these.

Likes "Share Count Shrinkers": Modest growth, but using FCF to shrink number of outstanding shares by 8% to 10% annually. 20% of portfolio here too. Kohl's (KSS) as an example. Over last 20 years, gone from 30 stores to national, higher sales than JCP. $46 stock, trades less than 10x 2012E eps, buying back stock. Took markdowns, viewed as obsolete, beaten by internet.

We're posting up notes from the Ira Sohn Conference. Lone Pine Capital's Stephen Mandel gave a presentation on how he's bearish on fixed income and how he likes Kohl's (KSS) & companies that shrink their share counts, as well as tech leaders.

Fixed income:. "Heads I win very small, tails, I lose very big." Governments printing money, and want to inflate their ways out of debt. Pensions and individuals are using the rear view mirror to flood into fixed income.

Likes "Tech Leaders." Companies that are leaders in their fields, internet search, PCs & mobile devices, travel. (Note: he owns Apple (AAPL), Google (GOOG), and Priceline.com (PCLN)). Generate high ROIC, lots of excess cash, yet trading to less than run of the mill low growth industrial companies. Close to 20% of long portfolio in these.

Likes "Share Count Shrinkers": Modest growth, but using FCF to shrink number of outstanding shares by 8% to 10% annually. 20% of portfolio here too. Kohl's (KSS) as an example. Over last 20 years, gone from 30 stores to national, higher sales than JCP. $46 stock, trades less than 10x 2012E eps, buying back stock. Took markdowns, viewed as obsolete, beaten by internet.

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